At the present time, due to the demonetization of currency, India is migrating towards a cashless economy and the UPI system makes the process easier than before. Launched by then RBI Governor Raghuram Rajan on April 2016, UPI or Unified Payments Interface is basically a digital money transfer payment system, which allows people to transfer money between two bank accounts by using Smartphone.
This system is developed on the Immediate Payment Service (IMPS) and allows the users to transfer cash between two bank accounts with the help of a unique identifier like an email address, mainly known as VPA or Virtual Payment Address without knowing about the details of the beneficiary like IFSC (Indian Financial System Code), wallet/net banking passwords and account number Unified Payments Interface.
This way, the payment can be transferred both online and offline.
Though there are a number of methods available to perform digital money transfer like RTGS, NEFT, NFCs, Wallets etc., but UPI has been adopted by numerous banks due to the ease of use and 24/7 availability. Another advantage of using this system is that it is actually possible to have a few unique VPA as well as here the user can use numerous bank accounts without the requirement of going through the user’s own bank for different transactions. This is really beneficial for the large establishments or shopkeepers as this way they don’t have to run the transactions through the electronic machines like card readers. Here the digital money transfer can be initiated both by the sender and the recipient and the payment process is also conducted in a convenient, secure and integrated manner Unified Payments Interface.
Considering the importance of UPI [Unified Payments Interface] system, a number of banks have integrated this system. Some of the names include: Axis Bank, Andhra Bank, Federal Bank, Bank of Maharashtra, Canara Bank, ICICI Bank, Oriental Bank of Commerce, Karnataka Bank, United Bank of India, Union Bank of India, UCO Bank, YES Bank, Punjab National Bank, Vijaya Bank etc. Users can download this application of the respective banks from the Google Play Store of Android phones.
Now let’s have a look at the ways to use this system:
To use the UPI Unified Payments Interface system, the users first have to download and install this system on their Smartphones. Therefore, they will need to set the app login by creating a VPA or Virtual Payment Address of their preference and link that VPA to any bank account. The next step is to set the M-Pin and therefore, the users will be able to start transacting through UPI. Here VPA works as the financial address. To perform cash transaction through UPI, the users just need to have Smart phones with data connectivity and enabled mobile banking/SMS alerts on their phones.
So, this way UPI contributes a lot in the cashless economy system by bringing person to person digital money transfer even for little amounts online. This thing leads to decrease the total amount of cash in the system, low the tax evasion process, create a trail of different transactions and boost the revenues. Apart from that, this system also helps the banks to analyze and firm up the approvals for credit to customers.